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At $2.5 billion, tech stocks saw the biggest
inflows since March 2021, while outflows from U.S. Treasuries
rose to $1.3 billion for the week - their highest since February
2021 - as "stagflation" trades gathered momentum.
Emerging market equities enjoyed inflows of $4.4 billion, the
data from BofA also showed. Private clients of the U.S.
investment bank, holding $3.2 trillion in assets, increased
their allocation to stocks to a fresh record high of 65.2% but
cut bonds to an all-time low of 17.7%.
Stagflation is characterised by weak growth and persistently
high inflation. It is usually seen as a particularly vicious
period in the economic cycle, when very few asset classes
perform well.
The investment bank's bull and bear indicator held well below a
February high as lower bond yields and less exuberant global
equity inflows weighed on sentiment.
"Our view is long quality (major stocks) as that is the best
market and macro hedge in backdrop of stagflation and waning
fiscal and monetary policy stimulus," analysts led by Michael
Hartnett, chief investment strategist at the bank said in a
note.
While global markets have recorded a string of highs over the
summer period, market sentiment has become increasingly cautious
due to rising inflation. Tuesday's data showed euro zone
inflation increased to 3% year-on-year in August, the highest in
a decade.
In notable milestones, BofA said the U.S. stock market recorded
a string of 53 closing highs in 2021, the fifth most in the past
100 years. The previous four episodes were followed by heavy
market declines.
(Reporting by Saikat Chatterjee; Editing by Marc Jones)
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